Policyholders Beware of Whom You Hire Regarding Your National Flood Insurance Claim

Bad legal advice is to be avoided. Wrong legal advice and instruction can be disastrous. I was thinking about this while calling FAPIA Managing Director Nancy Dominguez to take down a wrong proof of loss form that some ignorant attorney had sent to a group as the proper NFIP proof of loss to be filed with a flood claim. The attorney sent a FEMA smoke and fire claim proof of loss for the Hermit’s Peak and Calf Canon Fire under a completely different federal program.

The attorney who sent the wrong proof of loss advertises on the internet about representing people for insurance claims and hurricane claims. Advertising does not mean somebody knows what they are doing. Heavy television and internet advertising lawyers can be the best at advertising but horrible at providing legal services.

I love skilled public adjusters. These types of public adjusters know insurance policies, the benefits available, and how to file claims properly. I recently noted that even the Florida Department of Financial Services Recognizes The Value of Licensed Public Insurance Adjusters.

Working with experienced and credentialed public adjusters who are trained and familiar with NFIP requirements is important to avoid technical errors that can lead to claim denials. Just because a public adjusting firm advertises that they are specialists in flood claims does not mean they are.

For example, a motion for summary judgment noted that the flood case had to be removed to federal court because the attorney wrongly filed the suit in state court. 1 American Strategic Insurance Corp. (ASI) issued denial/partial denial letters on August 5, 2020, September 8, 2020, October 13, 2020, and December 15, 2020. The SFIP and 42 U.S.C. § 4072 require lawsuits to be filed within one year of the date of written denial of all or part of the claim. The policyholders filed their lawsuit in state court on June 30, 2021, which was removed to federal court on October 29, 2021 – more than one year after the initial denial letters. Filing in state court does not toll the one-year statute of limitations, as federal courts have exclusive jurisdiction over NFIP claims.

While that is one reason the flood claim could lose, the public adjusting firm filed the proof of loss on a document that is not an NFIP-approved proof of loss form. The proof of loss form resembles the old proof of loss form, which expired in 2017. But it is obviously not a federal proof of loss form because it contains all kinds of Florida statutes that must be included on Florida proofs of loss—not NFIP proofs of loss form. Filing on the wrong proof of loss form can defeat recovery of a federal flood claim. There were other arguable deficiencies noted in the motion for summary judgment about the flood submittal by the public adjusting firm.

What does that public adjusting firm claim about its expertise in flood claims in its advertising?

Our Experience and Expertise in Handling Flood Claims

…we have extensive experience and expertise in handling flood damage claims. Our team of dedicated flood claim adjusters understands the unique challenges homeowners face when dealing with the aftermath of a flood. We have worked with numerous homeowners to assess the extent of damage, negotiate with insurance companies, and ensure that our clients receive the maximum compensation they are entitled to. With our in-depth knowledge of insurance policies and the claims process, we can guide homeowners through every step of the claim, making it as smooth and stress-free as possible. Whether documenting the damage, preparing the necessary paperwork, or advocating for our clients, we are committed to providing personalized and professional service….

One point of this post is to suggest that policyholders follow the advice I provide in Policyholders Should Carefully Select Their Public Adjusters. Anybody can claim or say anything on the internet, whether true or not. In my book, PayUp!: Preventing A Disaster With Your Own Insurance Company, I noted how important it is to select a “good” public adjuster:

When hiring a public adjuster, perform due diligence and vet them properly. Make sure they are licensed. Check their credentials. Check to see if they participate in your state’s professional organizations for public adjusters. Generally, the best public adjusters are active in the field, are highly experienced, undertake continuing education, and work in leadership roles.

A second point for everybody dealing with NFIP claims is that strict adherence to SFIP terms and timelines is critical in NFIP claims. Even seemingly minor procedural errors can result in the denial of otherwise valid claims. This is why policyholders should be keenly aware of whom they are hiring to obtain professional help for their insurance claims.

Try to hire the best.

Thought For The Day

If you think it’s expensive to hire a professional, wait until you hire an amateur.
—Red Adair

1 Cene v. American Strategic Ins. Corp., No. 1:21-cv-23819 (S.D. Fla. June 20, 2022).